I turn now to our ambition of work for all. A higher percentage of men and women employed than ever before.

I can report that after two and a half years of this Government, unemployment is now lower than at any time in the last twenty years.

This Government has not only delivered the New Deal, but delivered new jobs - 700,000 more since 1997.

And the minimum wage and working families tax credit are making work pay.

But we need to go further.

There are today one million job vacancies waiting to be filled and vacancies are at record levels, not in one region alone, but in every region of the United Kingdom.

We need to equip the unemployed with all the skills they need for all the jobs that exist.

So I can announce to the House that the New Deal first introduced for the under-25s will be extended to all those over-25 in every part of the country.

Options will include :

- the offer of a job with a private sector employer;

- self employment;

- work based retraining;

- or college training.

Backed up by advice counselling and mentoring.

I can also announce today new choices for lone parents to get new skills, go to college and go to work.

From now on, lone parents will not only be able to train for jobs while receiving income support, but I can announce that they will also benefit from college-based childcare places for 10,000 more children, making a total of 37,000 in all. All lone parents with children above 3 will receive notice of these new choices.

In 1909 Britain created the first Labour Exchange in the world - to link potential employees to vacant jobs. And today, with one million vacancies spread throughout the country, Britain must use the most modern technology to match the jobs without workers to the workers without jobs.

We will now create a national jobs phone-line under which, for the first time, in every locality, the employment service will continuously update unemployed men and women about new vacancies suitable for their skills.

For every constituency in the country, the Government will provide assistance for Members of Parliament, irrespective of political party, to bring the unemployed and potential employers together.

Our reforms since 1997 have cut youth and long term unemployment by half.

A return to full employment was once a dream. It is now not only a promise but a possibility. In the next decade if we stay the course of reform it can become one of our country's proudest achievements.

And, as we extend opportunities to those who are out of work, we will extend the responsibility to take up the work on offer. The informal or hidden economy is now draining billions of pounds in fraudulent benefit claims and unpaid taxes.

This loss of revenues, this incidence of fraud, this waste of resources, cannot be allowed to continue and especially when there are jobs that benefit claimants could take.

Lord Grabiner QC, will chair a task force bringing together the Treasury, the Inland Revenue, Customs and Excise, the Department of Social Security and the Employment Service. He will investigate the scale of the problem and the cost to the taxpayer, recommend a plan of action and set a timetable to crack down on the hidden economy.

He will examine ways to move economic activity from illegitimate to legitimate businesses. He will consider increased fines for fraud and new requirements specifically for those suspected of being in the hidden economy - to sign on for benefit not every fortnight, but every single day.

I say to the unemployed who can work: we will meet our responsibility to ensure there are job opportunities and the chance to learn new skills.

You must now meet your responsibility - to earn a wage. And we are ensuring work pays more than benefits.

All our measures for work, taken together, mark a new dividing line. This Government believes that the way to help the unemployed is extending the New Deal not abolishing it.

As we pursue our ambitions for growth and jobs, we can and must keep our environmental commitments.

Under the Deputy Prime Minister, Britain took the lead in successfully negotiating the Kyoto Agreement.

And I am today announcing the results of our consultation with business on the climate change levy.

Our original proposal cut carbon environmental pollution by 2010 by 1.5 million tonnes a year.

Our consultation has shown that we can cut environmental pollution even further, by 2010 - by a total of over 2 million tonnes a year - and at the same time cut the levy from 1.75 billion pounds to 1 billion pounds.

I have decided that renewable energy sources and combined heat and power will be exempt from the levy.

The main rate per kilowatt hour will be cut from 0.21 to 0.15 pence. And there will now be an 80 per cent discount to energy intensive sectors signing energy efficiency agreements.

Taken together, these changes approach a 90 per cent discount on the levy published at Budget time in return for agreed industry action to cut emissions.

All the revenues raised will be recycled to business.

I can confirm that every business will receive a tax cut of 0.3 percentage points in employer national insurance contributions.

And I have ensured that this package is not only revenue neutral for business and revenue neutral between manufacturing and services but even after the national insurance change there is no gain to the public purse.

In the run up to the Budget we will consult on a new 100 per cent first year investment allowance for companies moving from environmentally unfriendly to environmentally friendly technologies and processes.

I propose to make available not, as originally announced, 50 million pounds, but in its first year a total of 150 million pounds to support energy efficiency in British industry.

With all our measures, Britain is on track to meet our country's Kyoto target.

The fuel escalator was inherited from the previous Government.

Since 1997 the escalator has been needed to reduce the 28 billion pounds deficit we inherited as we put in place our new measures to protect the environment.

Those who have opposed the escalator - including some who originally imposed it - have to explain how, without it, they would have cut the deficit, made money available for public services and in the last two years been meeting our environmental commitments.

Having cut the deficit and introduced our new environmental policies, we are now in a position - instead of the pre-announced 6 per cent escalator - to make our decisions Budget by Budget with the following commitment: if there are any real term rises in road fuel duties, they will be lower and the revenues will go straight to a ring-fenced fund for the modernisation of roads and public transport.

Now that the return leg exemption of air passenger duty has been declared in breach of single market law I am today starting a Pre-Budget consultation on replacing it with a new lower rate for lower fares. These changes will be revenue neutral.

Today I am also implementing recommendations that have come from Martin Taylor to prevent, detect and punish tobacco smuggling.

Smuggling is now costing us 2.5 billion pounds a year. The Pre-Budget Report contains details of our decisions - new scanners at major ports to detect contraband goods; new cigarette pack marks; and new and tougher fines and penalties for those who smuggle and those who sell smuggled goods.

I turn now to our next ambition - to reduce and then abolish child poverty in Britain. The promise of the next decade and the new century should be not just for some children but for every one of Britain's children.

By April, child benefit for the first child will be 15 pounds.

By the next April, for the typical family, child benefit and the children's tax credit will be 23 pounds. And with our 10p starting rate of income tax and the cut from 23p to 22p in the basic rate, the tax burden - national insurance as well as income tax - for the average family will be cut to its lowest level for 25 years.

Our intention is to integrate the children's tax credit and the child elements of working families tax credit and income support into one single credit paid direct to the mother - built on the foundation of universal child benefit.

At today's prices it would mean child payments starting at 15 pounds a week in contrast to 11.05 pounds in 1997 and, for the poorest child, rising to over 40 pounds a week.

In our Pre-Budget consultations we will also examine whether through the working families tax credit or other measures we can give more help to the mother who wishes to stay at home in the first months after her child is born.

Government must do more, but Government on its own cannot win the war against child poverty.

It can only be won by the combined energies of public private and voluntary sectors working together.

We need not only cash but caring.

So the Pre-Budget Report will consult on new reforms to support the community organisations that are closest to people and where dedicated staff and volunteers can offer one-to-one help.

First a new Children's Fund which will provide project grants for community action to tackle all aspects of child poverty.

Second, so we can develop new and innovative ways to support families and children, Sure Start will now see resources devolved not just to local Government but to local partnerships led by neighbourhoods and the voluntary sector.

Third, for too long the voluntary sector has been held back by outdated tax laws.

We propose that in future, for every pound a British citizen donates to charity, the government will contribute to that charity an additional 28 pence.

And for every pound contributed through payroll-giving, the Government will contribute not 28 pence but up to 50 pence worth of tax relief.

And there will now be tax relief, not just for cash donations to charities, but for gifts of quoted shares.

The British people's willingness to give can give all our children a better chance and all of us a better society.

From a platform of a stable economy and sustainable finances we are delivering 40 billion pounds extra for health and education.

And it is only by continuing our policies for stability and steady growth that we will be able to achieve a further ambition for Britain, to build the best public services.

In our second Comprehensive Spending Review, to be completed next year, we will match investment with reform - increasing the amount of resources available for the NHS and education in our public services.

I can announce two decisions that can be made now.

Through the windfall levy, 5,000 schools throughout Britain have already been modernised.

With the addition of a further 150 million pounds, to the four billion pounds already allocated for schools capital, the Secretary of State for Education will be able to treble that figure.

By 2001 the number of schools modernised or being modernised will total 15,000, half the schools of Britain, benefiting over 5 million pupils.

There is a strong public health case for year-on-year real term increases in the price of cigarettes.

While we will now make our decisions Budget by Budget, I can announce a new approach: the extra revenues from a 5 per cent real terms rise in cigarette duties would go straight to additional investment in the National Health Service, worth 300 million pounds a year, 300 million pounds extra for hospitals and health care which could start next April.

I have a further announcement to make.

From this week the 100 pound winter allowance is being paid to every pensioner household in Britain.

The Secretary of State for Social Security will announce later today that the winter allowance will not just be paid this year but next year and every year from now on.

For pensioners with incomes above benefit level who are not wealthy, we propose a better deal on savings. The elderly especially will benefit from my proposal to cut the starting rate of tax on savings from 20p to 10p - 1.5 million pensioners will benefit.

I have one final announcement.

All Governments have agreed that we ought to provide the most help for our most elderly citizens - those over 75 or 80 who are more likely to be in poverty and more likely to have special needs.

Some have suggested a new age-related addition to benefits.

Some have suggested the way to do this is to provide the very elderly with a reduction in the TV licence fee. I have rejected that option.

Instead, from next Autumn, pensioners 75 or over - every pensioner aged 75 or more - will receive their television licence free of charge.

At a cost of 300 million pounds a year, every one of the 3 million households with a pensioner over 75 will be able to save 101 pounds a year.

Madam Speaker, this Government is demonstrating that enterprise and fairness can go hand in hand. This Government's work for Britain has only just begun and I commend this Report to the House.